National nonresidential construction spending decreased 0.3 percent in April, according to an Associated Builders & Contractors (ABC) analysis of U.S. Census Bureau data.
On a seasonally adjusted annualized basis, nonresidential spending totaled $1.2 trillion. Spending was down on a monthly basis in 10 of 16 nonresidential subcategories. Private nonresidential spending decreased 0.3 percent, while public nonresidential construction spending was down 0.2 percent in April.
“Nonresidential construction spending fell for the second consecutive month in April but remains just 0.3 percent below the all-time high established in February,” says Anirban Basu, ABC’s chief economist. “An unprecedented increase in manufacturing construction spending has pushed overall nonresidential activity 31.9 percent higher over the past two years. Ongoing investment in industrial facilities, as well as significant infrastructure-related outlays, will keep nonresidential spending elevated despite the current expectation that interest rates will stay higher for longer. This outlook is reflected in ABC’s Construction Confidence Index, which shows that a majority of contractors expect their sales to increase over the next two quarters.”
Construction job openings
The construction industry had 338,000 job openings on the last day of April, according to an ABC analysis of the U.S. Bureau of Labor Statistics’ Job Openings & Labor Turnover Survey (JOLTS).
Industry job openings decreased by 8,000 in April and are down by 25,000 compared to April 2023. This mark is the lowest since March 2023.
There are several reasons for that, according to Basu.
“First, JOLTS data can be volatile, especially at the industry level,” he says. “Second, payroll employment data show ongoing hiring, while ABC’s Construction Confidence Index shows a majority of ABC contractors intend to increase their staffing levels over the next two quarters. And third, contractors continue to lay off workers at a low rate while workers are quitting at an elevated rate, both signs of a tight labor market.”
Basu believes the weakening demand for construction workers is likely happening in the residential segment.
“More new homes were completed in the first four months of 2024 than during any four-month period dating back to 2007,” he says. “The combination of ample new-home inventory, a slumping multifamily segment and high interest rates has cut the demand for new residential construction.”
